Download A: A B

Chapter 7
7-1

Estimate Costs
 Focuses on the processes to estimate the monetary
resources needed to complete the project work or
activities.

Determine Budget
 Aggregating the individual cost for each of the project
activities or work package components to determine
the cost baseline or overall project budget.

Control Costs
 Updating the project’s status while monitoring the
project’s budget and managing any changes to the
baseline plan.
7-2
7-3

The project’s schedule can be determined based upon
the tasks and time estimates in the WBS
 The schedule will also depend on how these activities are
sequenced

The project’s budget can be determined based upon
the activities and time estimates from the WBS as well
as the cost of the resources assigned to the WBS tasks

Iterations may still be necessary

The objective is to create a realistic project schedule
and budget!
7-4

Project Management Tools
 Gantt Charts
 Project Network Diagrams
▪ Activity on the Node (AON)
▪ Critical Path Analysis
▪ Program Evaluation and Review Technique (PERT)
▪ Precedence Diagramming Method (PDM)
7-5
7-6
7-7

Project Management Tools
 Gantt Charts
 Project Network Diagrams
▪ Activity on the Node (AON)
▪ Critical Path Analysis
▪ Program Evaluation and Review Technique (PERT)
▪ Precedence Diagramming Method (PDM)
7-8
Project Network Diagramming Tool
 Activities – boxes (nodes)
 Arrows () – precedence and flow
 Dummy Arrows (--->)
 Predecessors, Successors, or Parallel

7-9
Activity
Description
Estimated
Duration (Days)
Predecessor
A
Evaluate current technology
platform
2
None
B
Define user requirements
5
A
C
Design Web page layouts
4
B
D
Set-up Server
3
B
E
Estimate Web traffic
1
B
F
Test Web pages and links
4
C,D
G
Move web pages to
production environment
3
D,E
H
Write announcement of
intranet for corp. newsletter
2
F,G
I
Train users
5
G
J
Write report to management
1
H,I
7-10
A: AB
7-11
Possible Paths
Path
Path 1
A+B+C+F+H+J
2+5+4+4+2+1
Path 2
A+B+D+F+H+J
2+5+3+4+2+1
Path 3
A+B+D+G+H+J
2+5+3+3+2+1
Path 4
A+B+D+G+I+J
2+5+3+3+5+1
Path 5
A+B+E+G+I+J
2+5+1+3+5+1
Total
18
17
16
19*
* The
Critical
Path
17
7-12

Longest path

Shortest time project can be completed
 Zero slack (or float)
▪ The amount of time an activity can be delayed before it
delays the project

Must be monitored and managed!
 Project manager can expedite or crash by adding resources
 Fast tracking – running activities in parallel which were
originally planned as sequential
 The CP can change
 Can have multiple CPs
7-13

Program Evaluation and Review Technique

Developed in 1950s to help manage the
Polaris Submarine Project

Developed about the same time as the
Critical Path Method (CPM)
 Often combined as PERT/CPM

Employs both a project network diagram
with a statistical distribution
7-14
Activity
Predecessor
Optimistic
Estimates
(Days)
Most Likely
Estimates
(Days)
Pessimistic
Estimates
(Days)
Expected
Duration
(a+4b+c)
6
A
None
1
2
4
2.2
B
A
3
5
8
5.2
C
B
2
4
5
3.8
D
B
2
3
6
3.3
E
B
1
1
1
1.0
F
C,D
2
4
6
4.0
G
D,E
2
3
4
3.0
H
F,G
1
2
5
2.3
I
G
4
5
9
5.5
J
H,I
.5
1
3
1.3
7-15
Possible Paths
Path
Total
Path 1
A+B+C+F+H+J
18.8
2.2+5.2+3.8+4.0+2.3+1.3
Path 2
A+B+D+F+H+J
18.3
2.2+5.2+3.3+4.0+2.3+1.3
Path 3
A+B+D+G+H+J
18.6
2.2+5.2+3.3+3.0+2.3+1.3
Path 4
A+B+D+G+I+J
20.5*
2.2+5.2+3.3+3.0+5.5+1.3
Path 5
A+B+E+G+I+J
18.2
2.2+5.2+1.0+3.0+5.5+1.3
* The Critical Path
7-16

Based on 4 fundamental relationships
 Finish-To-Start (FS)
 Start-To-Start (SS)
 Finish-To-Finish (FF)
 Start-To-Finish (SF)
7-17
7-18

Lead is starting the next task before the first
task is complete
▪ Example: Begin installing the operating systems when
half of the PCs are set up

Lag (or negative lead) is the adding of a
buffer of time before the next task begins
▪ Example: Once the walls have been painted, wait one
day before laying the carpet so that the walls have had a
chance to dry
7-19



Introduced in 1997 in a book called Critical Chain by Eliyahu Goldratt
Based on his previous work called the Theory of Constraints
CCPM is based on the idea that people often inflate or add cushioning to
their estimates to create a form of “safety” to compensate for
uncertainty or risk because …
 Your work is dependent upon the work of someone else,
and you believe that starting your work will be delayed
 Your pessimism from previous experience where things
did not go as planned
 Your belief that the project sponsor or customer will cut
your project schedule or budget so you inflate your
estimates to guard against this cut
7-20

Why are projects still late?
 Student’s Syndrome or procrastinating until the last
minute before starting to work on a task
 Parkinson’s Law or the idea that work expands to fill
the time available
▪ People will rarely report finishing something early because
there is little incentive to do so or because they may fear that
management will cut their estimates next time
 Multitasking of resources or “resource contention”
▪ A person is often assigned to more than one project or
required to attend meetings, training, etc. As a result, they
can no longer devote their time to tasks that are on the
critical path
7-21

Begins by asking each person or team working on a task to
provide an estimate that would have a 50% chance of being
completed as planned
 About half of the project tasks will be completed on time, about half
won’t

Instead of adding safety to each task, put that safety in the
form of buffers where it is needed most
 Feeding buffers
▪ Reduce the likelihood of bottlenecks by ensuring that critical tasks will start
on time when a task acts as a feeder to another task on the critical path
 Resource buffers
▪ Reduce resource contention
 End of Project buffers
▪ Are equal to one-half of the time saved from putting safety into each task
7-22
Project Schedule with Safety in Each Task
A
B
10 Days
10 Days
C
E
10 Days
10 Days
D
10 Days
Critical Chain Project Schedule
A
B
C
E
5 Days
5 Days
5 Days
5 Days
D
10
Buffers
5 Days 2.5 Days
7-23
And the critical path are similar
 The difference is the CCPM takes into account resource contention
 Takes a more project portfolio view
 Other projects should be scheduled so that a resource can be
dedicated to a particular task
 Requires that everyone understand that each project task has a 50%
chance of being completed as scheduled, so about half of the tasks
will be late.
 This is the reason for having the project buffer.
 Instead of tracking each task individually, we become more
concerned with the project buffer –i.e., the project will be late only
if it uses more than the allotted project buffer.
 Instead of penalties for being late, bonuses or other incentives for
completing tasks early may be needed

7-24
1.
Define what resources will be needed to perform
the work
2. Determine the quantity of resources that are
needed
3. Define the cost of using each resource
4. Calculate the cost of the task or activity
5. Ensure that the resources are leveled, that is,
resources have not been over allocated, assigned
to more than one task scheduled at the same time
7-25

A number of project management software
tools are available to plan and track the
progress of your project

However, having a fundamental
understanding of these project management
techniques is important to make the most of
these software tools
7-26

Direct Costs


Indirect Costs


Often have to “Build one and throw it away” to understand a problem or a
new technology
Prorated Costs


Costs incurred prior to the project, such as a project that has been
restarted after a failed attempt
Learning Curve


The cost for covering such things as rent, utilities, insurance, etc.
Sunk Costs


The direct cost of labor or other resources
The idea that there is a cost associated with using a resource
Reserves

Contingency funds to be used at the discretion of the project manager
7-27

The project schedule and budget may require
several iterations before it is acceptable to the
sponsor, the project manager, and the project
team.

Once the project schedule and project plan are
accepted, the project plan becomes the baseline
plan.

Once accepted, the project manager and project
team have the authority to execute or carry out
the plan.
7-28

http://www.profsr.com/msproject/msproj01.htm

http://office.microsoft.com/enus/training/FX100565001033.aspx

http://www.project-blog.com/
7-29